Mark IV "may lose" E-ZPass recompete - NY Post

We love headlines with the verb qualifier "may."   "Mark IV may lose east coast deal" reads the headline in the New York Post today about the Great Belated Protracted and Beleaguered Recompete of E-ZPass technology. Hey, it's a supposed to be a competitive procurement and if it is true competition, and not a rigged game, then sure the incumbent contractor may lose.

Is that news?

It would be news surely if Mark IV couldn't lose, something the cynics about the IAG do sometimes say, but we don't see the evidence for that claim.

The body of the NY Post report says something different:

"Mark IV Intelligent Vehicle Highways System is in danger of losing its 15-year-old government contract because its private-equity owners starved the company of research dollars, putting the firm behind rivals that are looking to snatch the valuable contract when it expires in August 2010, according to a source who is deciding whether to renew with Mark IV.

"Sources said Mark IV under BC Partners' ownership didn't get much in the way of research dollars, putting it at a disadvantage to other companies that offer similar technology...

"Mark IV hasn't updated its technology in a meaningful way since it got the original contract 15 years ago, and rival shops have cropped up with offerings that could render Mark IV's technology obsolete."

The Post quotes their source: "We are working with the same technology we had in 1994."

Reporter Josh Kosman specializes in mergers and acquisitions for the business section of the Post.

The fact 1994 E-ZPass technology is still in use, we'd point out, is hardly the fault of Mark IV.

E-ZPass IAG hasn't asked for new technology until the present procurement.

It has renewed the old contracts for the same technology because it didn't want any change.

On the superiority of TransCore's technology the NY Post cites its eGo sticker tags and TransCore's readers ability to "handle simultaneous functions" such as doing border security priority scanning as well as toll collection.

Mark IV isn't commenting on any of this because of IAG rules against discussion of the procurement.

It is wellknown however that under Martin Capper Mk4 have taken a consistent line against sticker tags, arguing that they are inferior technology.

We think Mark IV may have made a strategic error in this regard - sticker tags are inferior in some respects, or you can say: more limited in some of their capabilities.

But for most tolling work they are good enough, and why buy performance that isn't essential?

If IAG is interested in sticker tags Mark IV could always supply those built to the open standard ISO 18000 6C and build the capacity to read them alongside the IAG tags or 5.9GHz.

It is a bum rap to say Mark IV hasn't invested in new technology. They have been among the leaders in developing 5.9GHz which is the lodestar of new toll technology. And for combining tolls and other functions they developed the IAG/TDMA ASTMv6 Fusion transponder, and they have dual protocol readers like others. 

TDMA ASTMv6 was a superior technology and Mark IV was a leader in developing that, but apart from the truck pre-clearance program PrePass, and 407ETR in Toronto no US tollers picked up on it.

The NY Post article has the IAG source cited as being "part of the (E-ZPass) contract review process" and also concerned about bankruptcy of the associated auto parts business: "I'm concerned they are an asset of a company in bankruptcy."

He blamed Mark IV's troubles on the "private-equity firms loading up the company with debt to fund the buyouts."

Such over-leveraging is a problem in many areas of the economy including the public sector, but it's not clear to us it is a particular problem for Mark IV IVHS division.  We could be wrong of course.

Someone talking to the NY Post however thinks it is, which may be significant. Or may not be.

The NY Post report also claims that Chris Murray chosen as successor to Martin Capper as president of the IVHS division last December is expected to retire at year's end. Murray is something of a mystery man, coming on as president without any announcement, and popping up months later having a comment attributed to him as president rather than Martin Capper in a press release.

We thought that merely reflected Mark IV's lack of any full time press relations/public relations officer, but maybe the explanation is more kremlinological.

Judgment will have to wait.

http://www.nypost.com/seven/07132009/business/taking_its_toll_178963.htm

TOLLROADSnews 2009-07-13